Fighters from the Islamic State of Iraq and the Levant (ISIL) have taken control of Azaz, on a crucial rebel supply route located near the border post with Turkey, killing opposing rebel fighters, arresting pro-western opposition activists and setting up sniper positions on rooftops, eye witnesses have reported.

“They have controlled Azaz and the surrounding area since Wednesday,” said Hussein Halabi, a Syrian media activist speaking from the Turkish border crossing of Bab al-Salameh, adding that rebels of the Free Syrian Army (FSA) had begun fighting back.

Gunfire and artillery rattled and boomed in the near distance as he spoke.

The seizure of the town puts al-Qaeda in control of territory immediately adjoining a Nato country for the first time, a development that will heighten fears in the West about the rapidly growing power of jihadist groups within the rebellion against the Syrian regime.

It signals a new chapter in the Syrian war, one where western aligned, more moderate, rebel factions and al-Qaeda openly battle one another for power and control of rebel-held parts of the country.

Activists in the area told the Telegraph that ISIL fighters surrounded Ahli hospital in Azaz demanding that the Nothern Storm, the ruling Free Syrian Army group there, hand over a German-Syrian doctor and nurse, who they claimed had been taking photographs of wounded ISIL fighters inside the hospital.

“The Northern Storm brigade refused to hand over the doctor. The argument escalated into a shoot-out that killed at least five of their fighters,” said one activist in the area who did not want to be named. “You cannot reason with al-Qaeda. You say no, and they shoot.”

Fighters from another FSA brigade in Aleppo, Syria’s largest city, about 20 miles south of Azaz, were sent to try to broker a truce. “Reinforcements from the Tawheed Brigade were sent to impose a ceasefire on the two sides,” said a spokesman. “There is still no ceasefire yet... Negotiations are under way.”

The relationship between ISIL - many of whose fighters are battle-hardened veterans of jihad in Iraq and Afghanistan - and other rebel factions in northern Syria has been rancorous for more than a year. Many of the original rebels against the Assad regime resent the presence of foreign jihadists in Syria, and disagree with al-Qaeda’s aim of transforming the country into an Islamic state.

An opposition sources said that the Free Syrian Army now regarded ISIL as “a direct threat” and were preparing to counter attack in an attempt to “finish them once and for all”.

But a spokesmen for the FSA was more cautious, and said the rebels would be too stretched to fight on two fronts.

“We are having meetings to try to understand why ISIL want to kill us. They are trying to attack our revolution, to kill the dream of liberty just like the Syrian regime is,” said Louay al-Mokdad. “We don’t enough resources to attack them, but at the same time we have to protect our people.”

Al-Qaeda had been attempting to avoid repeating the mistakes it made during the Iraq war, where its efforts to impose a hard-line interpretation of Islam on the country’s Sunni population prompted a backlash. “Sahwat” or “Awakening Councils” were established to fight against them.

In Syria, ISIL and Jabhat al-Nusra, another al-Qaeda affiliated branch had focused on humanitarian programmes in rebel-held parts of the country, trying to win the population over by supplying people with bread, gas and electricity.

But in recent months, local residents have said, the group has been overplaying its hand. Hardcore foreign jihadists who have flooded into Syria have not shown the same patience as the home-grown Islamists, imposing strict Sharia religious law on rebel areas.

There have been grim accounts of beheadings and people shot dead for minor infractions of the jihadists’ decrees.

“It’s terrible. I wanted to raise the Syrian opposition flag outside my coffee shop but my family stopped me because they fear I will be killed by al-Qaeda,” said one resident of Aleppo. “Only their black flag is allowed now.”

ISIL appears also to have launched a campaign to assassinate senior rebel commanders sympathetic to the West. Three rebel leaders were gunned down in the rebel held parts of Latakia province, three senior figures of the large Islamist rebel brigade Ahrar al-Sham were killed, and the group has voiced death threats against Sheikh Abu Salah, an FSA personality in Idlib province.

The extremist group openly declared war on two mainstream rebel groups last week in what it labelled operation “cleansing evil”.

As a result, a resident of Idlib province told the Daily Telegraph, the FSA had decided to hit back. “There was meeting of military commanders in northern Idlib, and they declared that ISIS has to give up control of all the area along the border with Turkey.

“If they don’t leave willingly, the FSA will make them leave by force. All the FSA commanders are on high alert, expecting clashes this week.”